Few Investors Awake to 'Super-Saving' for Early Retirement

Story Highlights

Just 20% of nonretired investors are familiar with "super-saving" strategies

About four in five are at least a little interested in learning about them

More than seven in 10 think they could benefit from super-saving tactics

WASHINGTON, D.C. -- Americans have no shortage of reasons to accumulate savings, whether it be for retirement, an emergency fund, a major purchase (like a house or car) or a life experience (like college or a family vacation). Although many Americans have trouble saving any amount, the internet is full of advice for an even more energetic approach called FIRE -- or Financial Independence/Retire Early. It encourages workers to save half or more of their family income through things like frugal living and heavy investing to achieve "financial freedom."

So how many Americans are pursuing this goal? It turns out the FIRE bandwagon is extremely small.

According to a recent Wells Fargo/Gallup Investor and Retirement Optimism survey, just 1% of U.S. investors who are in the workforce -- defined as nonretired adults with at least $10,000 already saved in stocks, bonds or mutual funds -- say they are saving 50% of their take-home pay in order to retire early. That translates to about one-half of one percent of all nonretirees.

Yet, the poll reveals the potential for more people to save at this level. While only 1% of nonretired investors say they have already embarked on saving half their take-home pay, another 1% say doing so would be easy for them and 3% say it would be "not too difficult." And although not highly promising, an additional 41% say it would be "difficult, but not impossible" to save this much. This leaves just over half of investors (54%) who believe it would be "impossible" for them to save at the super-saver level.

How realistic would it be for you to save 50% of your take-home pay in order to retire early?

Based on nonretired U.S. investors

November 2018

%

Impossible

54

Difficult, but not impossible

41

Not too difficult

3

Easy

1

Already done It

1

"Investors" is defined as U.S. adults with $10,000 or more invested in stocks, bonds or mutual funds

Wells Fargo/Gallup, Nov. 12-20, 2018

Most Think They Could Benefit From Super-Saving Strategies

Aside from the difficulties inherent in saving a large proportion of one's earnings, one reason so few investors are already pursuing FIRE may be a lack of familiarity with the techniques. More than half of nonretired investors, 55%, say they have heard nothing about various approaches for "'super-saving' to achieve financial independence and early retirement." A quarter say they have heard a little about it, while just one in five have heard a lot (4%) or a moderate amount (16%).

At the same time, there is good news for those hoping to spread the FIRE movement: Nonretired investors show interest in learning about it, and most think they could benefit from incorporating the concepts into their own life.

About half of nonretired investors are "very" (13%) or "moderately" (31%) interested in learning about the various approaches for super-saving and another 38% are "a little" interested. Just 18% are not at all interested.

Nearly three-quarters agree that they could benefit from applying super-saving concepts and tips to their own life. This includes 16% who strongly agree and another 56% who somewhat agree.

The poll finds that familiarity with super-saving is low across gender, age and asset levels of investors. At the same time, women are a bit more likely than men to believe they could benefit from it (78% vs. 68%), and investors younger than 50 show more interest than those 50 and older in learning more about it (49% vs. 38%).

Bottom Line

Gallup trends show a change in how Americans feel about money since the last recession, with more now identifying as someone who enjoys saving rather than spending. In line with this, recent government reports indicate that the national saving rate was 6.7% in 2017, significantly higher than the 3%-4% range just before the recession. But the saving rate still lags far behind what it was decades ago; it also trails what most Americans need to secure a comfortable living in retirement or even to survive an unexpected lapse in employment without going into debt.

Saving 50% of take-home pay may not be practical for most people. But given that many investors are intrigued by the concept once they hear about it, and they believe it could benefit them, it may be prudent for them to explore it. Of course, investors don't know what they don't know, so this is where financial advisers may come in -- helping their clients understand that super-saving is an option, and perhaps coaching them to include it in their goals.

The results of this Wells Fargo/Gallup Investor and Retirement Optimism Index survey are based on a Gallup Panel web study completed by 1,022 U.S. investors, aged 18 and older, Nov. 12-20, 2018.

The Gallup Panel is a probability-based longitudinal panel of U.S. adults. Gallup recruits panelists using random-digit-dial phone interviews that cover landlines and cellphones, as well as using address-based sampling methods. The Gallup Panel is not an opt-in panel.

The sample for this study was weighted to be demographically representative of the U.S. adult population, using the most recent Current Population Survey figures. For results based on this sample, one can say that the maximum margin of sampling error is ±5.5 percentage points at the 95% confidence level. Margins of error are higher for subsamples. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error and bias into the findings of public opinion polls.